South African Airways (SAA) is effectively broke, Business Day reported on Thursday.
A cashflow analysis given to MPs on Wednesday in preparation for an SAA presentation to Parliament on Friday reportedly shows that the airline is effectively bankrupt.
SAA reportedly went into a negative cash position in July and further deterioration is expected in the months to come.
By October, SAA expects its cashflow position to improve but only on the assumption that it is going to receive financing and government support of close to R800million. On Friday, SAA chairperson Dudu Myeni will reportedly tell Parliament that the airline posted a year-on-year loss of R1.46billion in the first quarter of this year – R71million worse than the same period last year.
SAA needs a capital injection of R13 billion over three years to survive, Business Day reported. Worse, DA deputy finance spokesperson Alf Lees reportedly said that the cashflow projections did not include the R6.8billion in loans that SAA must pay to its lenders at the end of the month, that it was hoping to renegotiate.
On Monday, TimesLive reported that according to an investigation into SAA, the findings of which were given to the DA, SAA contracts amounting to R5.7billion may have been irregular. According to the report, 38 SAA contracts were reportedly investigated by EY, and 32% of these were found to have been in the most problematic category.
Last week, it was revealed that SAA asked Treasury for a R10 billion bailout in March. Eyewitness News (EWN) reported that Gigaba revealed this in a written response to a Parliamentary question, and did not say whether the request was granted.
Business Day reported that SAA will tell Parliament on Friday that it has an "aggressive" five-year corporate plan, which has been refined with the help of aviation experts. But its success depends on the airline being recapitalised.Suggest a correction